Saudi finance minister “very optimistic” on 2016 budget gap

Saudi Arabian Finance Minister Mohammed Al Jadaan said on Thursday that he was optimistic about efforts to cut a huge state budget deficit caused by low oil prices.

Asked by reporters if the deficit for this year, which is expected to be announced late next month along with the 2017 budget plan, would be lower than originally planned, Jadaan said it was too early to say but he was personally very optimistic. “I have just been appointed a week ago and am now looking into many files – the budget, contractor payments and other files … I am very optimistic,” said Jadaan, who took over the finance ministry at the end of last month.

The original budget plan for 2016 envisaged a deficit of 326 billion riyals ($87 billion), after a deficit of 367 billion riyals in 2015. But some local analysts now expect this year’s deficit to come in well below that projection, because of drastic cuts in state spending and delays by the government in paying debts that it owes to the private sector, particularly construction firms.

Jadaan, speaking on the sidelines of an economic conference, reiterated that the government intended to make all delayed payments to the private sector “as soon as possible”. Delayed payments are estimated to total a “significant amount of billions” of dollars, he said. Some private analysts have calculated they may total tens of billions of dollars.

Jadaan also said he would work on making the finance ministry’s handling of the state budget more clear and transparent. He was speaking on the sidelines of the inaugural meeting of a new committee formed by the six-nation Gulf Cooperation Council, which groups the region’s wealthy Arab oil-exporting states.

The Committee for Economic and Development Affairs discussed ways to cooperate in diversifying economies and developing non-oil industries, said an official statement from the meeting, which was attended by economic and energy officials from GCC countries.